No more Twinkies: Unions and the death of
By Bob Confer
Today is a dark day for U.S. manufacturing, as the storied
corporation Hostess Brands, Inc. announced that it was closing shop and
liquidating, selling off its brands, facilities, and equipment.
It is a sad ending to a company that had been in operation since 1930 and had
weathered the Great Depression and the Great Recession. The closing will
eliminate a staggering 18,500 jobs.
Those jobs could have been saved
had those workers ó or more specifically their unions ó agreed to
wage concessions. But they didn't, wrongly believing that Hostessí threats of
closure were idle.
No one in his right mind would have found the warnings idle, considering that
the company had already declared bankruptcy in January of this year ó
but the cocksure leaders of the Bakery, Confectionery, Tobacco Workers and
Grain Millers International Union (BCTGM) did, and continued to demand that
workers strike at over two-dozen of the companyís 33 plants.
That was labor suicide ó the straw that broke the camelís back. There
was no way that a company already $860 million in debt could weather the
BCTGMís killing of Hostess wasnít limited to the strike. The unionís demands
had plagued Hostess for years, forcing ó through the legalized
monopolization of labor supply ó wages that the market wouldnít bear.
The striking line workers were paid healthy salaries, $16 to $18 per hour. In
a low-profit, low-selling-price business such as baked goods (things that are
basically commodities), those wages arenít sustainable, especially
considering that baking and distribution involve a lot of manpower.
According to the Bureau of Labor Statistics, the mean hourly wage for the
designation of ďbakeries and tortilla manufacturersĒ was $12.57 in 2011.
Supposing that Hostessí median wage was $17, they were paying 35 percent more
than the national average.
Hostess was looking for wage concessions of only eight percent. Even after
the cuts, Hostess still would have been paying their workers handsomely, 24
percent more than the industry norm. Mind you, this one-year cut would have
been followed by guaranteed wage increases of three percent in each of the
three years that followed, capped off by one percent in the fourth year.
So, the pain would have been only temporary and cancelled out in just three
But, BCTGM gambled and it didnít pay off. Rather than keeping over 18,000
people gainfully employed in a bad economy, where the U6 employment rate is approaching 15 percent, they opted
to put every one of them out on the streets, where their $680/week becomes
$0/week until unemployment benefits kick in at $400/week, putting a drain on
taxpayers who are already paying for unprecedented numbers of unemployed for
unprecedented lengths of time. Once those benefits fade away, itís very
likely those workers will remain unemployed, as very few communities support
a manufacturing base that can overcome the closure of bakeries as large as
Hostessí. So, the union basically sent their workers to the bread
lines ó an ironic metaphor for food producers.
This fiasco speaks volumes of the ills of unions, which will cut off their
nose to spite their face. Itís just one in a long line of union-led disasters
of the past few years, which range from the General Motors collapse (GM
couldnít support overly generous wages and pension benefits) to the states
themselves (which are leaning on taxpayers even more to fund their weakened
pension plans for public-sector workers).
People just wonít learn. Union bosses donít have an inkling of the basics of
economics, and neither do their members, most of whom
have been brainwashed by union propaganda and have developed an overt
entitlement mindset. They force upon their employers wages and benefits that
canít be sustained in the long run. They fail to see that doing so makes
their products unaffordable in an increasingly competitive global economy and
thus destines their firm for destruction, which will ultimately harm their
job, their retirement benefits, and the pensioners who retired before them.
That mob mentality also hides the simple fact that labor is an economic
transaction based on the individual, not the collective. Itís a simple trade
in which a worker should willingly enter into agreement with an employer and
vice versa. Work is an employer's exchange of competitive monetary and
benefit compensation for the use of the worker's physical and mental
services. As with any free-market economic activity, either party can prevent
ongoing transactions, whether such termination is based on dissatisfaction
with what the exchange garners or on the influence of supply and demand in
the micro- and macro-markets.
Basically, the act of employment is really no different from making a
purchase at the local grocery store: You donít need a consumer cooperative to
buy Twinkies, and you donít need a labor cooperative to make Twinkies.
Itís a lack of focus on that simple premise that made that iconic product and
its producer extinct, as well as the jobs of those who made them.
The unions were looking for a victory, despite the odds stacked against them.
They didnít get one. They lost miserably. Sadly, so did Hostess. The economy,
the taxpayers, and, above all, the workers, are worse off for that ridiculous
gamesmanship by BCTGM.
When will it ever end? It makes one wonder which of Americaís great companies
might be the next to die.
Bob Confer is a contributor to The New American. He is the vice-president of
Confer Plastics, Inc. and a weekly columnist for the Greater Niagara
This originally appeared in the 16 November 2012 The New American at:
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